Government National Mortgage Association (Ginnie Mae): History and Programs
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Updated February 23, 2025
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What Is the Government National Mortgage Association?
The Government National Mortgage Association (Ginnie Mae) is a federal government corporation that guarantees the timely payment of p
rincipal and interest on mortgage-backed securities (MBSs) issued by approved lenders. Ginnie Mae connects the United States housing market to capital markets, providing low-cost financing for federal housing programs through the Federal Housing Administration (FHA), Veterans Affairs (VA), the Department of Agriculture, and HUD‘s Public and Indian Housing.1
Key Takeaways
- The Government National Mortgage Association (GNMA) is a federal corporation that guarantees principal and interest payments on mortgage-backed securities issued by approved lenders.
- Ginnie Mae was established in 1968 as part of the U.S. Department of Housing and Urban Development (HUD) to promote affordable homeownership.
- The GNMA is backed by the full faith and credit of the federal government, unlike Fannie Mae or Freddie Mac.
What Does Ginnie Mae Do?
The Government National Mortgage Association was established in 1968 as part of the U.S. Department of Housing and Urban Development (HUD) to promote affordable homeownership.2 Ginnie Mae does not create mortgages but guarantees them for single and multifamily homes. Since the government backs these loans, homeowners can secure lower interest rates, lowering their borrowing costs. Using a mortgage calculator is an excellent resource for budgeting these costs.
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Ginnie Mae operates behind the mortgage market, neither issuing, selling, or buying pass-through mortgage-backed securities nor purchasing mortgage loans. Instead, approved private lenders originate eligible loans, pool them into securities, and issue mortgage-backed securities guaranteed by Ginnie Mae. Ginnie Mae’s MBS portfolio balance as of fiscal year 2024 was $2.6 trillion.3
Important
Ginnie Mae guarantees mortgage-backed securities to help open the home mortgage market to first-time homemakers, low-income borrowers, and other underserved groups.2
Ginnie Mae Guarantees
Ginnie Mae guarantees the timely payment of principal and interest from approved issuers, such as mortgage bankers, savings and loans, and commercial banks, of qualifying loans. An investor in a GNMA security doesn’t know who the underlying issuer of the mortgages is, but that the security is guaranteed by Ginnie Mae and backed by the full faith and credit of the U.S. government, just like the instruments issued by the U.S. Treasury.4
The GNMA guarantee means that Investors with shares in Ginnie Mae funds never have to worry about the impact of late payments or mortgage defaults on their investment. When mortgage borrowers fail to make payments, Ginnie Mae covers them.5
Ginnie Mae’s efforts aid those traditionally underserved in the mortgage market. Most mortgages securitized as Ginnie Mae MBSs are insured by the Federal Housing Administration (FHA), which typically insures mortgages to first-time home buyers and low-income borrowers.6
History of Ginnie Mae
After the Great Depression, when historically high unemployment rates led to unprecedented loan defaults, Congress passed the National Housing Act of 1934, a component of the New Deal, to help revive the U.S. housing market and protect lenders from mortgage default.
In 1968, thirty years after it was established, the Federal National Mortgage Association (FNMA), better known as Fannie Mae, split into two entities with two separate functions. Fannie Mae would purchase conventional loans and Ginnie Mae government-backed mortgages.7
Fannie Mae was converted from a government-sponsored enterprise (GSE) to a publicly traded company. Ginnie Mae was established as a GSE and part of the Department of Housing and Urban Development, or HUD. Ginnie Mae is the only home-loan agency explicitly backed by the full faith and credit of the United States government.
Ginnie Mae vs. Fannie Mae and Freddie Mac
Several organizations are similar to Ginnie Mae, notably Freddie Mac and Fannie Mae. Freddie Mac and Fannie Mae are government-sponsored enterprises (GSEs), federally chartered corporations owned by private shareholders.8
Where Ginnie Mae guarantees only securities that comprise mortgages guaranteed by federal agencies, such as the FHA and VA, its relatives may back securities whose mortgages are not insured by the government. Fannie Mae has a portfolio that invests in its own and other institutions’ mortgage-backed securities.
The GNMA is also ostensibly the only Mae or Mac backed by the full faith and credit of the federal government. In 2008, during the housing crisis, Fannie Mae and Freddie Mac were overseen by the government via a conservatorship of the Federal Housing Finance Committee.9 Some argue that the bailout erased Ginnie Mae’s distinction as the only federal agency guaranteeing mortgage securities that enjoy government protection against failure.
Does Ginnie Mae Provide Mortgage Financing?
Ginnie Mae does not originate any loans or provide financing for mortgage issuers. The GNMA doesn’t provide insurance to lenders against any credit risks that stem from borrowers. Furthermore, Ginnie Mae doesn’t set any standards for loan issuers, such as underwriting or credit standards.
How Does Ginnie Mae Help Make Mortgages More Affordable?
When mortgages are guaranteed by Ginnie Mae, lenders obtain a better price for their mortgage loans in the secondary mortgage market and can use the proceeds to fund new mortgage loans.10
Why Are Ginnie Mae Securities Considered a Safe Investment?
Ginnie Mae does not buy or sell loans or issue mortgage-backed securities (MBS) and its balance sheet doesn’t use derivatives to hedge or carry long-term debt.4
The Bottom Line
The Government National Mortgage Association (GNMA), or Ginnie Mae, guarantees principal and interest payments on mortgage-backed securities issued by approved lenders. The GNMA is backed by the full faith and credit of the federal government, unlike Fannie Mae or Freddie Mac. Ginnie Mae was established in 1968 to promote affordable homeownership.
